Gold has traded in a range between $1,580/oz and $1,680/oz for two weeks. Gold has broken out above the upper end of the range and resistance at $1,680/oz this morning. A close above $1,680/oz and rise to over $1,700/oz could result in gold quickly rising back to $1,800/oz.

Gold in US Dollars – 30 Day (Tick)

Support is at $1,600/oz, $1,580/oz and below that strong support is seen at the lows reached on September 26th of $1,532.70/oz.

Market participants are divided as to whether this is consolidation prior to a resumption of the bull market, whether a further sell off takes place or whether a bear market has commenced.

Strong physical demand being seen internationally, but especially in Asia, would suggest that gold may have bottomed and the bull market is set to continue in the traditionally strong autumn and winter months.

The fundamental factors that have driven the gold market in recent years - macroeconomic, monetary, systemic and geopolitical risk – also suggest gold’s bull market is set to continue.

Geopolitical risk is seen in the bizarre alleged plot by the Iranian revolutionary guard to use a purported Mexican drug dealer to assassinate Saudi Arabia's ambassador to the United States.

The Obama administration plans to leverage the incident into a new global campaign to further isolate the Islamic republic and maintain US dominance over the strategically vital region.

Gold in Euros – 30 Day (Tick)

The Middle East is already a tinder box on the brink of conflict over Iran's nuclear programme, with Israel increasingly twitchy over the progress Tehran is making towards an alleged capacity to make nuclear weapons.

A small spark such as this alleged plot and the reaction of the US, Iranian, Saudi and Israeli governments could result in military conflict in the region. Also, there are simmering geopolitical tensions between the US and the increasingly powerful Russia and China about the Middle East.

A military conflict would see oil and gold prices rise sharply due to supply concerns and safe haven demand respectively.

Geopolitical risk and the geopolitical instability in North Africa and the Middle East was one of the factors that led to gold’s rise in recent months and it is likely to remain an important driver of prices in the coming months.

Monetary risk remains and the Slovakian vote is another reminder of the real risk posed to the Eurozone and the euro through contagion.

Currency and macroeconomic risk is also seen in the Chinese warning to the US overnight that the US currency law risks a trade war and a 1930’s style Depression.

Gold in Chinese Yuan – 30 Day (Tick)

Systemic risk remains heightened and Trichet acknowledged that yesterday with his warning that the crisis is ‘systemic’ and his warning that the high interconnectedness in the EU financial system has led to a rapidly rising risk of ‘significant contagion’.

European banks are on the verge of collapse and global debt markets risk a critical meltdown. Finally, these risks are contributing to elevated macroeconomic risk and the significant risk of severe recessions in all major economies and the risk of a new Great Depression.

Gold remains an essential diversification that will protect from the real risks facing investors and savers today.

Those negative on gold and calling gold a bubble continue to focus almost exclusively on price.

A more enlightened approach for those genuinely concerned about people’s financial welfares would be to advocate a diversification into the safe haven asset and currency that is gold in order to protect against these real risks.

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It's far more simple: gold is being supported and bid in here because every single country has decided to print untold sums of confetti paper to push against the montrous collapse of debts. The only sound money is Gold. Period. It will once again lead allmarkets higher with alpha to boot. Silver will alpha-beta Gold.

Right on. Results of 15 years of central banks blowing a money / debt bubble is now collapsing on us and inflation is accelerating.

This Iran stuff is laughable. But it doesn't mean NATO won't attack Iran and blame it as our currencies collapse. Much like blaming 1970s inflation on OPEC and the Anchovy fishery failure after printing money for a decade for the Vietnam War and LBJ's policies:

Following Richard Nixon's imposition of wage and price controls on August 15, 1971, an initial wave of cost-push shocks in commodities was blamed for causing spiraling prices. Perhaps the most notorious factor cited at that time was the failure of the Peruvian anchovy fishery in 1972, a major source of livestock feed.[16] The second major shock was the 1973 oil crisis, when the Organization of Petroleum Exporting Countries (OPEC) constrained the worldwide supply of oil.[17] Both events, combined with the overall energy shortage that characterized the 1970s, resulted in actual or relative scarcity of raw materials. The price controls resulted in shortages at the point of purchase, causing, for example, queues of consumers at fueling stations and increased production costs for industry.[18]

Yes, paper is paper, whether it's a gold ETF or an oil ETF or a stock index. Good fundamentals about the underlying don't change the fact that you are trading paper not gold, and that paper is subject to the whims of the king of paper, The Bernak.

in fact you could argue the exact opposite. in order to pay for this war the powers of Saudi Arabia and Iran would have to sell their oil and gold. We are getting one wild card after wild card now which begs the question will we ever know the true source of said oddities? (An Iranian assassination attempt of the Saudi Ambassador on American soil using Mexican drug cartel gangs? Both brazen AND weird.) Anywho futures are soaring so it would seem the world has placed their faith a stable USA and our ability to work our way out of our own catastrophe.

Doesn't everyone know that in a recent court case a Mexican drug dealer cartel pleaded they were working for Washington DC ?

Why would it be so difficult to understand?.

We have CalderNuts, and Obama,on T.V. calling for stricter gun control,and CalderNuts saying the USA is the reason for the violence and cartels(while we train their officers military tactics)and THEN they go to work for cartels.(trained in the latest Mil Tactics)

Then we have Eric Holder getting caught HOLDING it,authorizing Operation Fast and Furious, with the POTUS's a/ok, and still calling for more gun control.

So far over 2000 firearms have been dumped by OUR GuB for use in Mexico.

Some are not making it in, one Fed officer is murdered with the weapons, and another murder with one is El Paso.

Meanwhile CalderNuts is screaming bloody murder, that WE are the problem................and he is in collusion with the Feds allowing 2000 illegal weapons(more) into Mexico.

Is your moniker Euro for "the deluded one?" You seem like a short-term minded, technical trader who froths at the mouth on the paper trade. There is nothing about the gold market that resembles a bubble. It is target #1 for sovereign statists who fear a return to real money. But for their tamp-down tantrums, gold would be moving physically at some multiple of the Crimex posted price. Stick around here and perhaps you'll gain some insight as to why...

If I were manipulating the price of paper gold, I would wait for some geopolitical event to give meaning to a rise in price, let all the dorks who think gold prices reflect fundamentals jump aboard, and then run all their stops just after gold closes over the $2000 level, ruthlessly driving prices back to the $1600-$1650 range and demoralizing everyone that sits all day watching for some progress.

The FED/JPM/Options/CME margin manipulations are part of the course, and we know we just have to punch the wall and live with them.

The biggest new threat seems to me that if China and India have been driving up the gold price, what happens now these economies have started crashing. China is likely in a bigger bubble than the US. Is it going to take gold down with it?

Gold might be currency in Asia, but that's no good if they arent generating wealth. Im thinking less about the Chinese CBs who surely must be wanting to diversify out of dollars, and more about your average citizen.

If China and India start what we have been thru, they will INCREASE thier purchases,like we are.

It will be difficult for them to increase their purchases as they are up (both counties in double digits)over 2010 purchases, and the year is not even over.

The Indians are buying like nuts at the 1600 range,sales are up 28% YOY over '10.

China is increasing their yearly purchases(Gvt) 10% per yr, for the forseeable future.

In the North Texas area, the largest dealers here (institutional) are 6-12 weeks out on Slvr,and if you do not buy brand new gld coins double the prems,(there are no pre-owned coins for sale,that you would want,less prems).

Im in the UK- got this email from my coin dealer today. They've had literally no coin stock for 2 weeks now...

"Due to the unprecedented demands for investment gold coins we are changing our price structure for 1oz gold coins. With immediate effect all 1oz gold coins will be bought at 100% of the London Gold Fix on day of receipt."

Come on with this gold stuff every morning...I'm a believer in the fundamentals of gold, but the correlation between this recent ramp in the stock market and the corresponding ramp in gold/silver is a little frightening to say the least. I'd feel much more comfortable is there was a negative correlation between equities and PMs. It's lockstep right now.